The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The $3.5 billion Baha Mar project is unlikely to open before the next general election in 2017, the Democratic National Alliance’s (DNA) leader warned yesterday.

Branville McCartney told Tribune Business he was basing his ‘opening forecast’ on the length of time that US bankruptcy court proceedings will take, coupled with the multi-million dollar cost of bringing the resort properties up to Bahamas Building Code standard.

And the DNA leader added that the Cable Beach-based development was unlikely to open as ‘Baha Mar’, implying that it would dump a damaged brand and/or have a new ownership structure.

“This matter will not any time soon result in people being back to work under the brand of Baha Mar,” Mr McCartney told Tribune Business.

“It’s unlikely that it will open as Baha Mar, and if it does open as Baha Mar, it’s not going to open before the next election.

“This thing is in court internationally, and back home there’s remediation work that must be done, costing many millions of dollars.”

The next general election is likely to be called by May 2017 which, if Mr McCartney’s forecast comes true, means that the Bahamian economy and society may have to wait almost another two years to enjoy any benefit from Baha Mar.

Such an outcome would have major negative repercussions for all concerned, not least the Christie administration, which had been relying heavily on Baha Mar to revive the economy and employment, thereby boosting its re-election chances.

“The bottom line is that Baha Mar is not about to open up any time soon, at least under Baha Mar” Mr McCartney reiterated yesterday. “Not with a court order and bankruptcy protection being in place.

“Court actions take time, and are not resolved overnight. I don’t see it opening up this year, bearing in mind and let’s not lose sight of the fact that the court has put a stop to anything going on at that property.

“And Baha Mar could not open in any event in terms of its infrastructure not being up to Code. Once the court matter is resolved, there is remediation work needing to be done to put that property in compliance with the Bahamas Building Code,” Mr McCartney added.

“I don’t see that happening this year; I don’t see that happening for quite some time. I don’t see this coming to fruition before the next election - not before 2017.”

Baha Mar, in its UK High Court claim against its contractor’s ultimate parent, China State Construction Engineering Corporation, is seeking $30 million in damages to remediate alleged faulty building work.

Whether Mr McCartney’s opening prediction comes true depends on numerous factors, not least whether Baha Mar is somehow able to repair - within three weeks - relations with its Chinese partners that appear fractured beyond repair.

The outcome here is directly linked to how soon Baha Mar can emerge from Chapter 11 bankruptcy protection - something that might also be linked to whether its principal, Sarkis Izmirlian, has a ‘Plan B’ up his sleeve.

Either way, Baha Mar’s move to file for Chapter 11 protection on Monday appears to have put paid to any hopes that the $3.5 billion project may open before year-end. Some time in 2016, at earliest, now seems a more realistic target - and even that might be optimistic.

Mr McCartney questioned what the Christie administration would now do to mitigate the likely fall-out, not only for Baha Mar’s recent 2,070 staff hires, but Bahamian entrepreneurs who had invested in retail and restaurant businesses at the project site.

Then there were the substantial, multi-million dollar sums owed to Bahamian contractors and those they had hired to work at Baha Mar, plus the damage done to this nation’s tourism and investment reputation.

“What is the Government of the Bahamas going to do about our international reputation, which has been soiled by this?” Mr McCartney asked.

“You can imagine how much it has been impacted, based on the fact that our supposedly Bahamian Riviera is in bankruptcy prior to even opening.

“It’s not a good thing. I leaves a very sour taste in the international tourism community’s mouth.”

Baha Mar’s brand, and by association that of the Bahamas, took a major hit due to the hundreds of late booking cancellations it was forced to make after construction delays forced it to miss the planned March 27 opening.

Mr McCartney said the sags had merely exacerbated the difficulties the Bahamas was experiencing in attracting new international investors, pointing to two US State Department warnings within 12 months about the lack of a transparent and accountable investment climate in this nation.

“We have investors who are shying away,” Mr McCartney told Tribune Business. “I can tell you, from what I am hearing from investors, who are saying to me: ‘It seems like everybody and their Ma has got their hands under the table’.

“It’s a hand out game, and the reputation of the country has been sullied by that. What’s going through at Baha Mar just adds to the reluctance of investors to invest in this country.”

The DNA leader said it was “amazing” for Prime Minister Perry Christie to concede the Government had been unaware of Baha Mar’s Chapter 11 intentions,

He added that it showed the Government had “not been keeping its finger on the pulse” of a project they were “wholeheartedly relying on as the saviour of the economy”.

“The filing of bankruptcy protection does not happen overnight,” Mr McCartney told Tribune Business. “That takes some time to happen.

“With the Prime Minister allegedly being so involved in discussions with Mr Izmirlian, and not knowing this was the move that Baha Mar was going to take, tells me one of two things.”

Mr McCartney said either Mr Christie was not fully aware of what was happening with Baha Mar, or Mr Izmirlian “led the country and, by extension, the Bahamian people down the wrong path”.

The Prime Minister, in his address to the nation on Tuesday, reiterated his and the Government’s belief that the broad outlines of an agreement between the Baha Mar parties to get the project back on track, and completed, had been in place as recently as Friday last week.

Baha Mar’s actions, though, suggest that one key party - the Izmirlians - were not on board with such an agreement, and perceived it as not being in their best interests, hence Monday’s Chapter 11 filing.

It would appear as if only the Government and Chinese were in agreement and, with Baha Mar’s cash resources set to run out by tomorrow, the Izmirlians did not fancy negotiating or signing up to anything under pressure.